6 / 50
6
THE ROLE OF
SELF-CONTROL
IN FINANCIAL DECISION MAKING
“I CAN RESIST EVERYTHING EXCEPT TEMPTATION.” (OSCAR WILDE’S QUOTE ON HIS
LADY WINDERMERE’S FAN, A PLAY ABOUT A GOOD WOMAN, 1892)
by LUIZ ROBERTO CALADO, Vice-President of the Brazilian IAFEI Member Institute IBEF,
and BERNARDO FONSECA NUNES, Stirling Behavioural Science Center, Scotland, UK
Self-control is an important capacity that prevents
people from acting on impulses which has been
identified as a critical human skill in both economics and
psychology. Economists often defined self-control as the
ability to stick to prior plans and thus have consistent
intertemporal choices. In psychology, self-control is
defined as the ability to regulate one’s behaviours,
emotions, and thoughts.
This article addresses recent developments that
are overcoming disciplinary boundaries in order to
generate a more coherent description for the role of
self-control on everyday financial behaviour, including
the behaviour of the Chief Financial Officers. As they
have to most important financial role in the firms. We
focus on applications closely related to policymaking
and financial regulation, such as: saving for retirement,
indebtedness and investment attitudes. The present
discussion suggests that the trait of self-control might
prevent failures by avoiding rather than resisting to
temptations.
First of all, the reader must be familiar with some key
concepts often discussed in the self-control literature.
BRAZIL